ifo Economists Panel: Lowest Growth and Inequality expected under a Left-Wing Alliance
In the opinion of 83 percent of responding economists, a coalition of the SPD, the Greens, and the Left Party would deliver the lowest growth rate of all plausible alliances following Germany’s upcoming election. “According to 44 percent of participants, the highest growth would be achieved by a Black/Yellow coalition – but this grouping of the CDU/CSU and FDP lacks a majority according to current polls,” says ifo researcher Niklas Potrafke. Meanwhile, 38 percent of participants believe carbon emissions would be reduced the most under an SPD/Green coalition, which currently also lacks a majority. These are findings from the latest Economists Panel, a survey of economics professors at German universities by the ifo Institute and Frankfurter Allgemeine Zeitung.
“According to the survey a Red/Green/Red coalition would represent a sea change in policy direction, which would translate into a different economic policy with higher taxes and more government transfers,” Potrafke says. “That would also have massive consequences for the real economy.” A full 77 percent of the economists expect that, in addition to delivering the lowest economic growth, Red/Green/Red would have the highest unemployment rate and 86 percent believe they would have the highest national debt. However, 55 percent of the economists also believe that a Red/Green/Red coalition would achieve the greatest net reduction in income inequality.
Even a coalition of the CDU/CSU and FDP, which currently lacks a majority, could be expected to have a significant impact on the real economy: Black/Yellow would achieve the lowest unemployment rate, according to 43 percent, and the lowest public debt ratio, according to 73 percent, with 70 percent expecting it to have the highest net income inequality and 56 percent the highest carbon emissions of all the alliances.
Should either a so-called traffic light or a Jamaica coalition be formed, respondents believe the effects on growth, inequality, the public debt ratio, the unemployment rate, and carbon emissions would be more restrained.
A total of 153 economists at German universities participated in the survey.
ifo Economists Panel September 2021
Germany’s Federal Election: German Economists Assess Possible Coalitions
Current forecasts for the outcome of the German federal election on September 26, 2021, indicate that there could be many different coalition options after the election. This raises the question of which coalition would likely achieve the most favorable economic development in Germany over the coming legislative period.
